Budget Speech

Financial Services

90.      The financial services industry is an important sector in Hong Kong’s economy. In 2009, financial services made a contribution of 15.2 per cent to our GDP and hired over 210 000 employees. The past two years have seen a remarkable development in this industry. On equity listing, Hong Kong remained first worldwide in 2010 in terms of the total amount of funds raised through initial public offerings. Enterprises from Russia and France came last year to list here for the first time. On asset management, Hong Kong’s combined fund management business rebounded significantly to $8,500 billion by the end of 2009, representing a year-on-year growth of about 45 per cent. Overseas financial institutions have focused on the investment opportunities in Asia. There is a growing number of international and Mainland investors choosing Hong Kong as a platform for their investment.

91.      We have also achieved some breakthroughs in the development of Renminbi (RMB) business in Hong Kong. Prominent growth and progress have been seen in various areas, including cross-border trade settlement, deposits, bond issuance and the introduction of financial products. Following the revision of the Settlement Agreement on the Clearing of RMB Business in July 2010, the cross-border RMB trade settlement handled in Hong Kong reached RMB 370 billion last year. At the end of last year, total RMB deposits in Hong Kong exceeded RMB 300 billion, which has increased by four times when compared to some RMB 60 billion a year ago. The continued issue of RMB bonds and the progressive implementation of the Government Bond Programme help boost the development of the local bond market.

92.      Hong Kong strives to enhance the competitiveness of its financial markets to develop itself into a global financial centre. Apart from optimising the local regulatory regime, we will foster the further development of offshore RMB business, consolidate our position as a platform to raise international capital and enhance the competitiveness of our asset management industry.

93.      First of all, we will maintain close contact with relevant Mainland authorities as well as the financial regulators and market participants of both sides to further develop Hong Kong’s RMB bond market. As at end-January, there were a total of 31 RMB bond issues with an issuance size of about RMB 74.4 billion. The range of issuers has expanded from Mainland financial institutions to multinational non-financial institutions. We will continue to encourage overseas enterprises to issue RMB bonds in Hong Kong, solicit more Mainland enterprises to issue bonds in Hong Kong and seek the expansion of channels for enterprises to invest in the Mainland the RMB capital raised in Hong Kong. Moreover, we will optimise the RMB clearing platform to attract more enterprises to use Hong Kong’s RMB settlement services. Diversification of RMB financial products and services will help consolidate Hong Kong’s status as an offshore RMB business centre.

94.      Second, we will continue to improve our listing platform to attract more enterprises from different places to list in Hong Kong. On the back of our liquidity, attractive valuations and access to investors in Asia, Mainland and overseas enterprises are attracted to list here. The Stock Exchange of Hong Kong Limited (SEHK) issued new listing rules for mineral and exploration companies in June 2010 to attract more enterprises from regions rich in natural resources to list in the territory. While maintaining high standard of regulation, the SEHK will continue to streamline the listing process for overseas companies, shorten the timetable and lower costs. Last year, the SEHK accepted more jurisdictions, including Brazil and the Isle of Man, to facilitate companies incorporated there to apply to list in Hong Kong. The SEHK is studying ways to further facilitate secondary listing of overseas companies in Hong Kong, and accept companies incorporated in other jurisdictions, including India and South Africa, to apply to list here. We will continue to work with the SEHK to step up promotion to attract companies, especially those from emerging markets, to list in Hong Kong.

95.      Third, on enhancing the competitiveness of our asset management industry, we will continue to seek to enter into agreements on the avoidance of double taxation with more trading and investment partners to foster the growth of asset management business. We will also continue to develop an Islamic financial platform in Hong Kong to diversify our financial markets. Stepping up promotion efforts will be high on our agenda in the coming year. The Government will continue to lead financial services delegations to stage roadshows in the Mainland and overseas markets with the aim of promoting Hong Kong’s strengths as a global financial centre. We will also strengthen the role of Invest Hong Kong in promoting our financial industry.

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